Swift not off the table yet
EU agrees on new Russia sanctions
02/25/2022, 00:33
The threat was in place: an attack on Ukraine would result in the largest package of sanctions ever decided, according to the EU in recent weeks. Action is now being taken. But with a view to the scope of the sanctions, there are definitely differences.
At a crisis summit, the heads of state and government of the 27 EU countries approved a comprehensive package of sanctions against Russia. The punitive measures affect, among other things, the areas of energy, finance and transport. In addition, there should be export controls for certain products and restrictions on visa policy.
Chancellor Olaf Scholz and his colleagues decided on the package on Thursday evening at a special summit in Brussels. Several heads of state and government called for more far-reaching measures even before the meeting began. Among other things, the focus is on the banking communication network Swift. A Swift exclusion would effectively exclude Russian financial institutions from the global financial system.
Germany also rejects this sanction instrument at the present time. Scholz justified this attitude in Brussels with strategic considerations. One should initially stick to the package of sanctions that has been prepared over the past few weeks, he said. Everything else must be “reserved for a situation where it is necessary to do other things as well”. However, Scholz did not say what kind of situation that could be. Austria’s Chancellor Karl Nehammer also spoke out against including Swift in the current package. “Swift is currently not an issue in the proposals either,” he said. “The background to this is that Swift’s suspension would affect the Russian Federation less than the European Union.” Firstly, Russia has its own payment system and secondly, Russia would immediately switch to the Chinese payment system. According to an EU diplomat, Italy, Cyprus and Hungary agreed with Germany that the time for the Swift exclusion was not right.
Isolate banks, cut spare parts supply
In contrast, several heads of state and government spoke out in favor of the harshest possible punitive measures and some also named Swift. The Slovenian Prime Minister Janez Jansa emphasized that the strictest possible sanctions package must be decided – including Swift exclusion. And Polish Prime Minister Mateusz Morawiecki said: “We must work for massive sanctions, for strict sanctions against Putin, against Russia. We cannot allow Putin to cross another Rubicon.” In any case, the topic is not off the table, in EU circles it was considered possible that Russia would be excluded from Swift at a later date.
The heads of state and government called on the responsible institutions to start work on a new, third sanctions package immediately. It should also create the possibility of freezing the assets of Russian oligarchs in the EU. According to information from the German Press Agency, the sanctions that have now been passed against the financial sector are primarily about cutting off banks from the EU financial markets. In the future, they should no longer be able to borrow or lend money in the EU. In addition, the refinancing of Russian state-owned companies in the EU should be prevented. Your shares will no longer be traded in the EU. Something similar is planned for the energy sector.
The main purpose of the sanctions against the transport sector is to cut off the supply of spare parts and other technology to the Russian aviation industry. With this, one can achieve a huge effect with relatively little effort and even shut down entire fleets, it said in Brussels. The export controls for high-tech products and software are intended to make it difficult for other key Russian industries to develop further. The country could be hit hard in the medium and long term, it said.
The restrictions on visa policy are said to be aimed at Russians, who have previously had privileged entry opportunities into the EU. In addition to diplomats, this also includes business people, for example. A formal decision on the package of sanctions prepared by the EU Commission and the Foreign Service is to be taken immediately by the Council of Ministers.